If a person owns at least 5% of the shares in a company and works for that company as a director then he is considered a director-major shareholder (dga). Director-major shareholders are deemed to receive a salary for the work they perform for the company and, in addition, they may receive dividends. As of 2023, the tax levy for these director-major shareholders may be higher because the rates in the corporate income tax and in Box 2 of the income tax will be adjusted.
Corporate income tax
Two rates apply in the corporate income tax. For a taxable amount up to and including € 395,000, a rate of 15% applies. For the portion of the taxable amount above this threshold, a rate of 25.8% applies. With this threshold, the government wants to accommodate smaller companies fiscally.
As of January 1, 2023, the lower rate will increase from 15% to 19% and the limit up to which this lower rate applies will drop from the current € 395,000 to € 200,000. As a result, a company will face the higher rate sooner and will also pay more corporate income tax in the first bracket.
If a person (together with a fiscal partner) holds at least 5% of the shares or profit-sharing certificates in a company, he has a substantial interest. The profit from substantial interest will be taxed in Box 2 of the income tax in 2022 (and 2023) at a substantial interest tax rate of 26.90%.
Starting in 2024, there will be two brackets in box 2: up to €67,000, the rate is 24.5% and above that it is 31%. This means a small advantage for a dividend payment lower than € 67,000 compared to 2022 but a larger disadvantage for the portion above this threshold. Combined with the increase in corporate income tax, this could quickly increase the combined rate but also reduce it.
The so-called efficiency margin for determining the customary wage will disappear, probably starting in 2023. This means that director-major shareholders may have to apply a higher salary.
Director-major shareholders themselves must ensure that they can substantiate the amount of their customary salary. But the rule of thumb is that it is equal to the salary of someone in the “most comparable employment”. Because of the efficiency margin, the director-major shareholder was allowed to set the customary salary at 75% of this comparable salary. With the elimination of that margin, it must become 100%.
So if in 2022 there was a comparable salary of € 100,000, in 2022 the customary wage could be set at € 75,000. But in 2023, this salary would then have to be set at €100,000.
It will be difficult to prove to the tax authorities that the salary that was comparable this year will suddenly no longer be comparable next year. It then becomes complicated for the director-major shareholder to maintain the same salary. Unless the payroll administration already took into account 100% of a comparable employment.
Ultimately, it is often difficult to determine what exactly constitutes comparable employment and what salary is taken into account. But it is therefore not obvious that the same salary can be used in 2023.
Wage or dividend
The adjustments that are made are important for the question: is it fiscally more advantageous for the director-major shareholder to have himself paid more salary or, on the contrary, to make a dividend payment? Because for wages the rate in Box 1 of the income tax applies, and for dividends the combined corporate tax rate and Box 2 income tax rate applies. In Box 1, the rate in the first bracket drops to 36.93% in 2023 (with a top rate of 49.5%). The minimum combined rate comes to 40.79% in 2023 (namely 19% corporate tax and 26.9% income tax in Box 2). In 2024, it will be a minimum of 38.85%, as the lowest rate in Box 2 will then be 24.5%.
The combined rate is calculated as follows. The taxable amount of a company is 100%, The corporate tax rate is 19% leaving 81% to be paid out as dividends. A levy of 26.9% means that 21.79% is deducted from that 81% (26.9% * 81). The combined levy is then 19% + 21.79% = 40.79%.
Another thing that comes into play when dividends are paid out over time is the plan to adjust the general tax credit. This credit depends on the amount of income, and the plan is to also include income from Box 2 and Box 3 from 2025. So for a director and principal shareholder who receives a dividend payment, there is a good chance that he will miss out on the tax credit.
Profits taxed lower in 2022
Furthermore, it is clear that 2022 may be a more advantageous year from a tax point of view to make a profit than 2023. Because next year, the profits of the company will fall into the high rate of 25.8% as of €200,000. Many companies will therefore try to bring profits forward, for example by selling an asset this year instead of next year.